Friday, July 18, 2014

Friday Watch

Posted by Gary .....at 1:02 AM
Evening Headlines 
Bloomberg: 
  • Ukraine Says Malaysian Airliner Shot Down Near Russian Border. A Malaysia Airlines (MAS) jet was shot down over eastern Ukraine, killing all 298 people on board, in an attack that the government in Kiev blamed on pro-Russian rebels. The separatists denied the accusation. Ukraine’s state security service said it intercepted phone conversations among militants discussing the missile strike, which knocked Flight 17 from the sky about 30 kilometers (18 miles) from the Russian border. U.S. officials said the weapon probably was a Russian-made model used widely in Eastern Europe. The Boeing Co. 777 crashed en route to Kuala Lumpur from Amsterdam in the main battleground of Ukraine’s civil war, threatening to escalate tensions in Europe’s worst geopolitical crisis since the end of the Cold War. A European air-traffic control agency routed planes away from the region, which sits astride some of the busiest routes to and from Asia. 
  • Putin Cornered as Malaysia Jet Crash Shows Isolation on Ukraine. President Vladimir Putin’s intransigence over Ukraine risks turning him into a global pariah should the blame for downing a Malaysian Air jet with 298 passengers aboard fall on pro-Russia rebels in eastern Ukraine. The crash of the Boeing Co. (BA) 777 follows by less than 24 hours the imposition of new sanctions against Russia that targeted major energy companies and banks. While the rebels denied accusations by the Ukraine government that they shot down the flight, the U.S. said this week that the separatists were being supplied with more heavy weaponry from Russia. 
  • Israeli Ground Troops Move Into Gaza to Stop Hamas Rockets Fire. Israel sent soldiers and tanks into Gaza in a ground offensive aimed at stopping the barrage of missiles fired by Hamas and other Palestinian militants after a short-lived cease-fire collaped earlier in the day. Accompanied by heavy artillery, the troop movement last night into the Hamas-controlled coastal enclave marked the first significant Israeli ground operation in Gaza since 2009. It followed intensified aerial attacks in which more than 200 Gaza residents were killed. Palestinians launched some 1,250 rockets into Israel, killing one, with many intercepted by Israeli missile defenses. Israeli Prime Minister Benjamin Netanyahu instructed the Israel Defense Forces to begin the operation to “destroy the terror tunnels dug from the Gaza Strip into Israeli territory,” according to a text message at 10:36 p.m. yesterday in Jerusalem. The goal is “restoring quiet to the citizens of Israel for an extended period, with significant damage to the infrastructure of Hamas and other terriorist organizations.” 
  • European Banks Seen Bowing to U.S. Russia Bans Amid Rising Fines. European banks, contending with escalating U.S. fines for sanctions violations, will likely bow to fresh bans imposed by the U.S. on financing Russian companies as the risks of dealing with the nation mount. The U.S. Treasury on July 16 named Russian companies to be barred from accessing U.S. equityor debt markets for new financings with maturities beyond 90 days. Lenders elsewhere may follow the sanctions, according to two European banking officials who spoke on condition of anonymity. 
  • China Home Prices Fall in Record Number of Cities on Price Cuts. China’s new-home prices fell in a record number of cities tracked by the government as developers cut prices to boost sales volume. Prices fell in 55 of the 70 cities last month from May, the National Bureau of Statistics said in a statement today, the most since January 2011 when the government changed the way it compiles the statistics. Prices in Shanghai and the southern city of Guangzhou fell 0.6 percent each from May, the biggest drop since January 2011, while they declined 0.4 percent in Shenzhen. Prices fell 1.7 percent in the eastern city of Hangzhou, the largest monthly decline among all the cities.
  • Government Bonds Rally Around the World on Demand for Safety. Government bonds rallied around the world, with a gauge of sovereign debt climbing to a 14-month high, as the shooting down of a Malaysia Airlines plane in Ukraine drove demand for the safest assets. An index of government bonds climbed to the highest level since May 2013, based on Bank of America Merrill Lynch data. The securities have returned 4.3 percent so far this year, recouping a loss from 2013. The aircraft was shot down over eastern Ukraine, killing all 298 people on board, in an attack the government in Kiev blamed on pro-Russian rebels. The separatists denied the accusation.
  • Kuroda Softens Yen Stance as Export Pain Evaporates: Currencies. Foreign-exchange traders detect a softening in Bank of Japan Governor Haruhiko Kuroda’s stance toward the stronger yen. While the currency has risen 4 percent this year to 101.22 per dollar, the central-bank chief signaled this week he’s satisfied with the current exchange rate. Kuroda told reporters in Tokyo the yen is no longer excessively strong and that the BOJ is on its way to meeting its inflation target. “He seems to be just ready to sit, wait, watch,” Sean Callow, a Sydney-based strategist at Westpac Banking Corp., said by phone on July 16. Westpac sees the yen climbing to 100 versus the greenback by the end of this year. 
  • Malaysian Air Drops as Ukraine Crash Follows Missing Flight 370. The stock lost 13 percent to 19.5 sen as of 9:04 a.m. in Kuala Lumpur, extending this year’s drop to 37 percent.
  • Asian Stocks Slip With Ringgit on Plane While Bonds Rise. Asian stocks fell, with shares in Kuala Lumpur dropping and the ringgit leading declines among emerging-market currencies after a Malaysia Airlines plane was downed in Ukraine. Bonds in the region rose with oil as Israel sending troops into Gaza added to global geopolitical concerns. The MSCI Asia Pacific Index slipped 0.6 percent by 10:03 a.m. in Tokyo, falling for the first time this week. The FTSE Bursa Malaysia KLCI Index lost 0.5 percent as Malaysian Airline System Bhd shares tumbled 16 percent. Japan’s Topix gauge slid 1.1 percent.
  • WTI Extends Biggest Gain in Month on Rising World Tension. Futures rose as much as 0.7 percent in New York, extending a 2 percent increase yesterday, the most since June 12. The Boeing Co. 777 crashed en route to Kuala Lumpur from Amsterdam in the main battleground of Ukraine’s civil war, threatening to escalate tensions in Europe’s worst geopolitical crisis since the end of the Cold War. Israel’s movement of troops and tanks into the coastal enclave marks the first significant ground operation in Gaza since 2009.
  • SEC Says House Insider Probe Involves 44 Funds, Entities. A regulatory insider-trading probe involving the U.S. House Ways and Means Committee and a top staff member also includes 44 hedge funds and other entities, according to a U.S. Securities and Exchange Commission filing in Manhattan federal court. 
  • JPMorgan’s(JPM) Dimon Gets $37 Million of Crisis-Era Options. JPMorgan Chase & Co. (JPM:US) will let Jamie Dimon collect about $37 million in stock options created during the financial crisis, as the board stands by its leader after risk-management lapses and billions of dollars in legal settlements. JPMorgan gave the chief executive officer 2 million stock-appreciation rights in January 2008, saying they would be available in five years if the board still deemed it appropriate. Last year, the firm delayed vesting by 18 months to address flawed internal controls exposed by botched derivatives bets.
Wall Street Journal: 
  • Malaysia Airlines Crash in Ukraine: Streaming Coverage.
  • Malaysia Airlines Plane Was Hit by Surface-to-Air Missile, U.S. Officials Say. At Least 283 Passengers Were on Board Flight Bound for Kuala Lumpur From Amsterdam. A Malaysia Airlines 3786.KU -13.33% plane carrying 283 passengers and 15 crew crashed Thursday in the battle-torn east Ukraine region of Donetsk, where U.S. intelligence agencies say it was struck by a ground-to-air missile. The U.S. agencies are divided over whether the missile was launched by the Russian military or by pro-Russia separatist rebels, who officials say lack the expertise on their own to bring down a commercial airline in midflight. "All roads lead to the Russians to some degree," said a U.S. official.
  • Israel Launches Ground Invasion of Gaza. Aim is to Crush Hamas Militants. Israel launched an open-ended ground invasion of Gaza aimed at crushing Hamas militants after 10 days of aerial bombardment, sending thousands of troops with tanks and armored vehicles into the Palestinian territory. The operation began at about 10 p.m. local time Thursday after Palestinian militants fired more than 100 rockets into Israel at the end of a five-hour cease-fire meant to allow Gazans to restock on food and other... 
Fox News:
  • Israel launches large-scale ground operation in Gaza Strip. The Israeli military reportedly sent thousands of troops into the Gaza Strip Thursday as part of a large-scale ground operation aimed at destroying underground tunnels and other "terror infrastructure" used by Hamas to target the Jewish State. The army said in a statement late Thursday that after 10 days of Hamas attacks, it had "initiated a ground operation within the Gaza Strip." The army said the objective was to strike a "significant blow to Hamas' terror infrastructure."
CNBC:
  • Stockman: Russia could be the next black swan. (video) In an exclusive interview with "Futures Now," Stockman said the turmoil in Russia could spark the next series of black swan events and cause the S&P 500 to lose "hundreds" of points. "We're at the very edge of a bubble which has been inflating since early 2009, and as a result of that any time now we could be hit by something you don't expect like this incident in the Ukraine or anything else that will take the market down in a big way."
  • Google(GOOG) earnings: $6.08 per share, ex-items, vs. expected EPS of $6.24. Google reported earnings that missed expectations while revenue topped Wall Street estimates on Thursday. Shares rallied in extended hours trading. The Internet giant reported earnings of $6.08 per share, excluding one-time items, on revenue of $15.96 billion. Analysts had expected the company to report earnings excluding items of $6.24 a share on nearly $15.62 billion in revenue, according to a consensus estimate from Thomson Reuters.
Zero Hedge:
Business Insider: 
Reuters: 
Telegraph:
Evening Recommendations
Oppenheimer:
  • Rated (FLIR) Outperform.
Night Trading
  • Asian equity indices are -.75% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 102.0 +1.0 basis point.
  • Asia Pacific Sovereign CDS Index 72.50 +2.0 basis points.
  • FTSE-100 futures -.42%.
  • S&P 500 futures -.14%.
  • NASDAQ 100 futures  -.08%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (ALV)/1.55
  • (BK).56
  • (GE)/.39
  • (HON)/1.36
  • (IPG)/.25
  • (JCI)/.83
  • (KSU)/1.18
  • (LH)/1.77
  • (ERIC)/1.02
  • (VFC)/.35
  • (BMI)/.57
  • (FHN)/.17
Economic Releases
9:55 am EST
  • Preliminary Univ. of Mich. Consumer Confidence for July is estimated to rise to 83.0 versus 82.5 in June.
10:00 am EST
  • Leading Indicators for June are estimated to rise +.5% versus a +.5% gain in May.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The G-20 Meetings and the (BURL) annual meeting could impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

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